Florida Keys News
Wednesday, August 14, 2013
Marina profit elusive

PLANTATION KEY -- Since undergoing a $5 million renovation in 2008, the village-owned Plantation Yacht Harbor Marina has proven to be a popular spot on the seafarers' trail.

It was even mentioned in a 2011 Yachting Magazine readers' poll in which they ranked Islamorada as one of their 50 favorite yachting towns.

But popular success aside, village officials say it will take until 2019 before the marina can sustain itself without taxpayer support.

"We've known for at least a couple of years, even keeping our occupancy really high, that the marina can't start the year $500,000 in the hole for debt repayment and then make a profit," said Public Works and Parks Director John Sutter, who also oversees the marina.

What Sutter is referencing is the village's repayment schedule for the $4.5 million it borrowed to upgrade the marina, which sits on the grounds of Founders Park. Once a high-class private facility that was purportedly linked to Mafia legend Meyer Lansky, the docks were literally cracking when the village went ahead with the upgrade.

The move, officials said at the time, was designed to both make the marina competitive again and to make it self-sustaining. Even after work was complete, and the economy had gone into free-fall, former Finance Director Cindy Lawson projected profitability within five years.

That would have been good news for Islamorada taxpayers. Unlike the village's more traditional municipal functions, Plantation Yacht Harbor Marina is run under an ordinary business model. If the marina covers expenses, taxpayers don't have to contribute. If it makes money, the profit can be used to defray taxpayer costs on other village endeavors. Losses, on the other hand, come out of taxpayers' pockets.

Budget figures, released by the village last week, show that in the absence of debt payments, the marina would be performing quite well. The operating profit projection for the fiscal year that ends on Sept. 30 is $339,000. Operating profits in the three previous years ranged between $167,000 and $282,000. And the proposed budget for the 2013-14 fiscal year projects an operating profit of $228,000.

But those figures look much less cheery when debt payments are figured in. Next year, the village will pay $490,000 in interest and principal payments on the marina. As a result, Finance Director Maria Aguilar is estimating that the town will have to prop up the marina with a $311,000 transfer from the sales tax-supported capital project fund. This year, that transfer is expected to be $337,000.

Debt payment on the marina will remain more or less static until it halves in 2019. In 2020, with the main $4.4 million loan paid off, the debt service will drop to less than $14,000.

Until then, said both Sutter and Aguilar, there is little the village can do to improve the marina's revenue picture. Rates for its approximately 65 to 75 slips (the specific number varies according to the size of the boats that are docked there) are already priced with market, Sutter said. And occupancy on a year-round basis is about 80 percent. Increasing that figure, he said, wouldn't be optimal, since it would probably come by bringing in more long-term customers, which would decrease space during the busy winter season for the more lucrative short-term market.

As for Lawson's prediction that the marina would be self-sustaining well before 2019, Sutter said it was based largely on an expectation that slip prices would be increased at a rate that the market simply hasn't allowed for.

"We feel that we are managing it and running it where we can," he said.


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